Lamp;T shareholders force poll at AGM

AUG 31: A section of the minority shareholders on Thursday forced a poll on four routine resolutions at the annual general meeting of Lars...

AUG 31: A section of the minority shareholders on Thursday forced a poll on four routine resolutions at the annual general meeting of Larsen amp; Toubro. The opposition to these resolutions came as a mark of protest against the company management8217;s alleged failure to add value to shareholder wealth.

The resolutions opposed included the adoption of the balance sheet and profit and loss account for the fiscal-ended March 31, 2000 and a revision in the salary and perquisites of whole-time directors. Even the appointment of auditors was opposed on the grounds that the auditors had not done their jobs well.

Meanwhile, the company will set up a private market for its engineering, procurement and construction EPC business. This is a part of its efforts to strengthen the operations and financial base of various divisions.

SS Marathe who chaired the annual general meeting said that all the major divisions of the company were in the process of implementing ERP solutions. Lamp;T has roped in JP Morgan and DSP Merrill Lynch as investment bankers for counsel on demerger of its cement business and the exercise is expected to last eight months, Marathe said.

According to him, capital was needed for the cement business from strategic and financial partners which prompted restructuring of the cement business through a demerger route. Lamp;T has invested substantially in cement and would not like to increase it further to ensure a balance in terms of capital commitment to various businesses.

In 1999-2000, the demand for cement grew at 15 per cent and all the factories operated at full capacity with operating margins improved from 1.5 per cent to 15 per cent during the year. However, the price of cement continues to be depressed. The overall cement capacity of the company is likely to increase to 16 million tonnes by the end of next year from the current level of 14 million tonnes following commissioning of grinding units in West Bengal and Arakkonam in Tamil Nadu.

Marathe said that Lamp;T8217;s operations in 1999-2000 were hit by the slow growth in the capital goods industry mainly due to excess capacities as against slowdown in demands. Despite this, the company booked orders worth Rs 8,146 crore as compared to Rs 7,688 crore in the previous year. The order backlog at the year end at Rs 6,819 crore is higher than Rs 5,870 crore at March 31, 1999, an increase of 16 per cent.

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Lamp;T has acknowledged that the year-ended March 31, 2000 was one of the most difficult years for the company. Industrial growth for fiscal 2000 at approximately 8 per cent appears to be healthy but is largely influenced by the growth in consumer goods and intermediate products.

Investments in the economy continue to be sluggish which is reflected in the negligible growth in the capital goods sector. Excess capacities in industries such as steel, paper and the slow pace of investment in the energy sector are some of the factors for the lacklustre growth in the capital goods industry. Coupled with this was the fact that the year saw a decline in realisation from the sale of cement although there was considerable volume growth.